A 10-year term insurance with sum insured of $100,000 paid at the end of the year of death is purchased by a 50-year-old
Posted: Tue Nov 16, 2021 9:01 am
- A 10 Year Term Insurance With Sum Insured Of 100 000 Paid At The End Of The Year Of Death Is Purchased By A 50 Year Old 1 (52.72 KiB) Viewed 236 times
A 10-year term insurance with sum insured of $100,000 paid at the end of the year of death is purchased by a 50-year-old male, with annual premiums paid in advance until the end of the term or earlier death. Assume no expenses. Allow for profit loadings by including a 10% loading in the sum insured when calculating the premium. Use AM92 ultimate with 4% interest p.a. (a) Calculate the yearly premiums. (3 marks) (b) Calculate the prospective policy value at the 5th policy anniversary (i.e., t=5) for profit reporting purposes (i.e., need to consider the profit). (4 marks) (c) For an unknown integer duration t (0<<<10), derive an equation of equilibrium (a recursion for the policy value from time t to time t+1) for this insurance product. Simplify your results as much as possible. (5 marks)